Two sides of the great labour productivity debate

Well-known union employment lawyer Josh Bornstein certainly added fuel to the national industrial relations debate last week in his stinging criticisms of the business community’s push for reform.

Any credible debate about productivity growth will acknowledge that such growth is affected by many underlying and fundamental determinants. But it is naive and plain wrong to play down the role that effective industrial relations policy can play.

Talk to any employer in Australia and there can be no doubt our national IR laws are having a direct impact on productivity growth.

Take, for instance, the offshore construction sector where unions are routinely holding multibillion-dollar resource projects to ransom in pursuit of outcomes that are seeing laundry hands and cooks earn more than $300,000 for working half the year.

By refusing to acknowledge such issues, our government is putting at risk the $500 billion worth of global investment slated for our shores. One international study not often cited by supporters of the Fair Work Act is the World Economic Forum’s global competitiveness report which, in September, ranked Australia 20th in the world overall and a dire 42nd in terms of labour market efficiency.

When Australia’s education enrolment rates, scientific research, quality of market competition and banking system all rank within the top 10, is there really any doubt that our dismal labour productivity is bringing down our overall global ranking?

It is mind-boggling that the government’s Asia white paper unveiled a grand plan to elevate Australia’s ease of doing business to within the top five in the world, yet blatantly omitted any reference to workplace reform. Another disturbing trend is the assertion that IR reform to facilitate flexible use of labour must mean stripping wages and conditions. When direct employee/employer agreements were in place in the resources industry under the previous IR laws, real wages grew by 12 per cent and employment increased.

Robust discussion about productivity should be encouraged, but attempts to play down the Fair Work Act’s negative influence are fooling no one in the wider business community.